India falls 18 places in global innovation index

New Delhi: India, a country that sees itself as a key player in the knowledge economy, is not as innovative as Slovakia, Slovenia, Estonia, and the Czech Republic.

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That’s the finding of the second edition of the Global Innovation Index, or GII, that was released on Tuesday and which ranks India 41 among 130 countries. The index has been created by Soumitra Dutta, a professor at French business school Insead, in association with industry lobby Confederation of Indian Industry (CII).

The US has been ranked first, Germany second and Sweden third in the index.

India was ranked 23 in last year’s index but the two editions aren’t strictly comparable because only 107 countries were ranked last year.

“Rather than India falling, other smaller countries have made significant improvements. We have included more countries this time around and that has affected India’s overall position,” said Dutta, whose index lists “regulatory hurdles, corruption and labour issues” as factors hindering innovation in India.

While indices such as this one are a good measure of how a country compares with others on a specific parameter (in this case, innovativeness), they are unlikely to significantly influence decisions by companies to invest in research and development. In the past few years, several multinational firms have made substantial investments in research centres in India.

This report comes at a time when India has launched several efforts to push the cause of scientific research and innovation. The government is set to table the National Innovation Bill in Parliament in its next session; the Bill makes it easier for private investment to flow into research and development. The government also plans to launch a $183 million World Bank-funded programme to accelerate innovation.

The report puts China at 37, eight places down from last year but four places ahead of India. Last year, China was ranked 29 and India 23. Also last year, global research and advisory firm Economist Intelligence Unit ranked India 58 on its list of innovative countries, one rank above China.

Indian policymakers and scientists frequently compare their research and innovation output with China’s, which in the past two decades has overtaken India on several indices that measure scientific prowess of countries.

Though most innovation indices rank countries on their research and development criteria, such as research spends as a proportion of the gross domestic product, or GDP, number of scientific publications and their patent output, newer parameters such as the ones employed by Dutta include soundness of banks, ease of doing business and the number of Internet users in a country.

According to Dutta, innovation is far more broad based and not necessarily confined to laboratories. “Innovation is a horizontal exercise. (US President-elect) Barack Obama’s innovative use of the Internet in the recent elections must also count in the country’s (US) metrics as it has a significant long-term impact,” he added.

For ranking purposes, each factor is categorized as input or output. Input factors reflect how conducive a country is to innovation and output factors to how effectively a country translates innovation into knowledge, competitiveness and wealth.

“These results are averaged and on the basis of that, global ranks are calculated,” Dutta said.

He added that China came ahead of India thanks to “the strength” of its foreign direct investment, or FDI, inflows; the report also lists China’s ease of accessing credit and the “wide variety of its manufacture imports and exports”.

Dutta said all significant inputs for this report were collected in early 2008. “This was before the financial crisis kicked in and I expect significant changes in the top 10 when we prepare the next report.”

An expert said he wouldn’t try to read too much into the rankings.

Sujit Bhattacharya, professor at the school of social sciences, Jawaharlal Nehru University, Delhi, said: “Innovation is now a very broad term and rankings are extremely relative. It’s more useful to look at the input variables, see how India fares on individual ones, and then implement measures to address them. Giving equal weightage to all variables, and averaging them out doesn’t help much.”